Tiny but Strategic Djibouti Dreams of Becoming East African Powerhouse

By Larry Luxner Uploaded on October 31, 2018

A country few Americans have ever heard of — and even fewer have visited — hosts the only permanent U.S. military base in Africa. It’s also home to China’s first overseas military base — just a few miles from America’s base — along with military outposts for France, Italy and Japan. In fact, Djibouti is home to more foreign bases than any other country, a reflection of its geostrategic value as a hub of counterterrorism operations, global shipping and regional stability.

The Republic of Djibouti is a New Jersey-size desert nation of just under 1 million people that sits on a prime piece of real estate. Wedged among three much bigger countries in the troubled Horn of Africa, it is the launching pad for American drone missions against extremist groups such as al-Shabab, Boko Haram and the Islamic State.

It’s also located along the Bab el-Mandeb Strait, one of the world’s busiest shipping corridors and a key chokepoint for Mideast oil. All of that makes the country attractive to world powers vying for influence in Africa and the Middle East, which in turn has helped Djibouti become one of the world’s fastest-growing economies. And now it’s building the continent’s largest industrial free zone, with cash from China.

Since declaring independence from France in 1977, Djibouti has had only three ambassadors in Washington. The first, Saleh Farah Dirir, served seven years; the second, Roble Olhaye, stayed on the job a record 28 years and was dean of the D.C. diplomatic corps until his death in 2015.

The third is 49-year-old Mohamed Siad Doualeh, who assumed his duties as ambassador here in January 2016.

“My priority here is to promote the strategic relationship between Djibouti and the United States, enhance people-to-people relations and highlight what Djibouti offers in terms of attractiveness for U.S. investment,” Doualeh, who also serves as Djibouti’s permanent representative to the U.N., told The Washington Diplomat in a recent phone interview. “There are big bucks to be made in our country.”

Actually, billions. Djibouti, ruled since 1999 by President Ismail Omar Guelleh, reported a GDP of $2.3 billion last year; this translates into per-capita income of $2,405. Its economy has grown an average 6 percent a year over the last decade, and foreign direct investment is expected to rise by 11.5 percent in 2018.

While Djibouti still grapples with widespread poverty, its economy stands in stark contrast to two of its neighbors, Eritrea and Somalia — not to mention Yemen, only 18 miles across the Bab el-Mandeb Strait — which are among the poorest, most dysfunctional countries on Earth.

Strategic Maneuvering

Following the 9/11 terrorist attacks, Guelleh began capitalizing on Djibouti’s strategic location and relative stability to attract foreign militaries and investment to his tiny nation, boosting its prosperity and security. Since Guelleh came to power, in fact, the economy has more than doubled in size.

Djibouti has also benefited from the geopolitical tug of war between the U.S. and China. The latter has poured billions of dollars into development projects in Djibouti as part its African outreach while insisting that its military base is strictly for peacekeeping and humanitarian purposes. The former accuses China of aggressively expanding its military might and using infrastructure projects and cheap loans to increase its control over indebted governments.

But the Americans and Chinese aren’t the only players in town. The Saudis have eyed building a base in Djibouti to help them fight Houthi rebels in Yemen. India, too, is reportedly interested in establishing a presence in the country; Russia and Turkey are rumored to have made inquiries as well.

Experts warn that with so many superpower rivals crowded into such a small space, it wouldn’t take much to spark a major conflict. And while Djibouti touts itself as a model of stability, it’s been accused of profiting from and fomenting the armed conflicts destabilizing the region — with help from China.

In a Sept. 27 opinion piece, Josh Rogin of The Washington Post wrote that “over the past five years, China’s official arms sales to Africa have increased by 55 percent and its share of the African arms market has doubled to 17 percent, surpassing the United States, according to the Stockholm International Peace Research Institute. There is also growing evidence that Djibouti is emerging as a strategic transit node for illegal weapons smuggled between Yemen and places such as Somalia.”

Rogin’s article quoted a Sept. 24 letter from Rep. Mo Brooks (R-Ala.) to Nikki Haley, the U.S. ambassador to the United Nations.

“Guelleh’s dictatorial reign has been largely fueled by a steady flow of Chinese cash, palaces and gifts,” Brooks wrote. “With new reports indicating his government is profiting from the burgeoning arms trade supplying Houthi rebels in Yemen and terrorist groups the U.S. is combatting across the African continent, it is time for his reckless and unscrupulous behavior to be firmly addressed by the United States.”

Doualeh defends his government’s record, insisting that even though Guelleh has been president since 1999, Djibouti under the 71-year-old leader has remained an island of calm in a region known for lawlessness and failed states.

“It’s true that Djibouti may be small, and I know that many people — and not just Americans — struggle to locate Djibouti on a map. But our country has always been recognized as being strategic,” he said. “It’s a maritime chokepoint, but because of our size and the fact that we don’t have much conflict taking place in our country, we have endeavored to keep Djibouti relatively stable in a volatile region. This may be why we do not grab headlines.”

Too Close for Comfort

Doualeh, who became ambassador following the death of his predecessor, Roble Olhaye, was only 20 when Olhaye took up his post in Washington back in 1988. At that time, Eritrea was still a province of Ethiopia, the Soviet Union was still intact and Djibouti itself was a backwater largely ignored by the United States and China.

These days, no one’s ignoring Djibouti. In fact, Doualeh says both the Obama and Trump administrations have recognized his country’s potential for contributing to regional security.

“I was very warmly welcomed in Washington and have enjoyed conversations with my counterparts, in particular those diplomats at the State Department. Through the Binational Forum, every year we hold meetings alternatively in Washington and Djibouti,” he told us. “We always have a hefty agenda and a whole host of items to discuss.”

A Djibouti trade mission was scheduled to visit the United States in late October, while in mid-December, Djibouti will host a fair organized by the Corporate Council on Africa.

U.S. interests in Djibouti encompass economic, political and security considerations.

France has always maintained a military base in its former colony, but after the 9/11 attacks, the Pentagon decided to establish a permanent base in Djibouti as well.

“We wanted to show our solidarity with the U.S. in a time of crisis, so we opened our territory and gave them a facility from where they could combat the threat of terrorism,” Doualeh said. “We see this as Djibouti’s contribution to world peace.”

Camp Lemonnier, as the U.S. naval expeditionary base is known, sits adjacent to the country’s international airport and serves as headquarters of the U.S. Africa Command’s Combined Joint Task Force-Horn of Africa (CJTF-HOA). Originally home to the French Foreign Legion, the base now houses CJTF-HOA and about 2,500 military and civilian personnel as well as Pentagon contractors. It also provides jobs for 1,200 local and foreign workers.

In May 2014, Guelleh and the Obama administration extended the U.S. lease on the 500-acre base until 2034, at a rent of $70 million a year. The base is to undergo a $1.4 billion upgrade over the course of that 20-year extension.

But America’s military dominance is increasingly being challenged by China, which opened its own naval base a few miles from Camp Lemonnier in August 2017.

Since then, tensions between the two adversaries have escalated. This past May, for example, the Pentagon formally accused the Chinese of pointing lasers at U.S. military aircraft operating out of Djibouti, disorienting pilots. China denied the charges.

Controversial Port Seizure

That, in turn, came just a few months after Djibouti seized control of the Doraleh Container Terminal from Dubai-based DP World, charging that it was terminating its 2006 contract with that company because it contained “elements that are in flagrant contravention of state sovereignty and the higher interests of the nation.”

Many have speculated that the seizure was the culmination of increasing hostility between Djibouti and the UAE, which has been making strategic inroads in the Horn of Africa, threatening Djibouti’s competitiveness.

The London Court of International Arbitration ruled the seizure illegal, delivering a legal blow to Djibouti and raising questions about its reliability as an investment option. Asked about that, Doualeh told The Diplomat that Djibouti’s contract with DP World “was the product of a corrupt deal.”

“We had a concession agreement with DP World but we found out there were provisions that were not acceptable,” he said. “We quietly tried to talk to our friends at DP World to correct those provisions, but we faced an impasse, so we were left with no option but to terminate the agreement. It was infringing on our sovereignty. We were ready to offer DP World compensation, but the agreement as it stood was not acceptable.”

American officials, however, worry that the seizure was less about state sovereignty and more about relinquishing control of the port to reward a generous benefactor: China. Indeed, Djibouti has since turned operations at the terminal over to firms linked to the Chinese government.

Despite concerns that Beijing is using money to gain leverage over Djibouti, the ambassador says China has been a key player in President Guelleh’s plans to turn the country, which has few natural resources, into a global trading giant. The government wants to invest billions in ports, roads, airports and other infrastructure projects to reduce unemployment, attract other foreign investors and — eventually — generate enough profit to pay off its debts.

In all, said Doualeh, China has so far provided $1.4 billion in financing to Djibouti for the following projects:

• The Doraleh multipurpose port, which will double the amount of cargo the country's existing port can handle to 9 million metric tons annually.

• The $4.5 billion Ethiopia-Djibouti railway, which now connects Addis Ababa to Djibouti City and the Doraleh Container Port, cutting what was a three-day trip to only eight hours. This project also has financing from the African Development Bank.

• The $340 million Ethiopia-Djibouti water pipeline; of the total, China provided $322 million and Djibouti $18 million.

“This is a strategic project for us and one we really need, because this will dramatically reduce Djibouti’s water shortage. There is room for other investors to come in, particularly U.S. investors,” the ambassador said. “I cannot second-guess China’s ambitions, but we clearly aspire to be a commercial hub. They want to help African countries develop their infrastructure.”

At What Price?

Djibouti has also embarked on the $3.5 billion Djibouti International Free Trade Zone, which will ultimately cover 48 square kilometers — just under one-third the size of the District of Columbia. The zone, touted as the largest of its kind in Africa, will ultimately contain hundreds of factories and is jointly managed by China and Djibouti.

“It is … a zone of hope for thousands of young job-seekers,” Guelleh said at the July 5 inauguration ceremony, which was also attended by the presidents of Rwanda, Somalia, Ethiopia and Sudan.

Doualeh said the free zone’s inauguration coincides with an increasing interest in trade liberalization across the African continent.

“Djibouti, like many other countries, just signed an African Union declaration proposing continent-wide borderless trade,” he told us. “Our economy is mainly derived from the logistics sector, but we’d like to diversify and tap into the potential for tourism. We also have some natural resources in abundance, like salt, and we want to exploit that. We see ourselves as a commercial hub based on the Singapore model. To us, this is worthy of imitation.”

But Djibouti’s ambitions may come at a steep cost if it becomes too dependent on Beijing’s largesse, leaving it vulnerable to China’s own ambitions if it can’t pay up. (Sri Lanka, for example, was recently forced to give up a strategic port to China when it couldn’t pay its loans.)

“The Trump administration needs to shift to an approach that places pressure on China to behave better in Djibouti and encourages the Guelleh government to reject Beijing’s scheme to turn that country into a Chinese vassal — before that instability further harms U.S. and African interests,” The Washington Post’s Rogin argued.

J. Peter Pham, director of the Africa Center at the Atlantic Council, pointed out that nearly 5 million barrels of oil flow each day through the Bab el-Mandeb.

“Djibouti’s strategic importance is undeniable. However, its dependence on China has become worrisome,” Pham said in an email. “Djibouti has borrowed $1.4 billion from China in the last two years alone — an astronomical sum for a country of barely a million people, representing more than three-quarters of Djibouti’s GDP. Altogether China owns 82 percent of the microstate’s external debt. What happens when the Djiboutians are unable to repay?”

Resolving Regional Conflicts

Despite its controversial embrace of China and its small size, Djibouti has played a key role in stabilizing the region. It has gone to considerable effort to help end the internal bloodshed that has ripped apart neighboring Somalia.

“For a long time, our diplomacy was and still is geared toward achieving a peaceful settlement in Somalia. The first attempt to mediate between the warring parties in Somalia was a Djibouti-led effort,” Doualeh said. “After almost a decade of volatility and what some called a ‘slow genocide,’ in 1999 we launched another major initiative called the Arta conference. It was led by civil society and all were welcomed, including the warlords, but we designed the mediation efforts so that those warlords would not hold any veto power. The Arta process was innovative, and it produced the first Somali authority to fill Somalia’s seat at the United Nations and other regional bodies.”

After “a year of very difficult, protracted discussions among Somalis of all walks of life,” as Doualeh put it, the talks produced “a viable basis to foster peace and reconciliation.”

While Somalia is still unstable, in Yemen the situation is much worse. Since early 2015, when Saudi Arabia led a coalition of like-minded Arab countries to intervene after Houthi rebels ousted the government, the fighting has killed 10,000 people, although one recent study put the estimate at 50,000 dead. The war has also left more than 22 million people — three quarters of Yemen’s population — in desperate need of humanitarian aid.

Northern Djibouti, in fact, is home to thousands of Yemeni refugees. “Some 80 percent of the tuberculosis cases in Djibouti are found among refugees and economic migrants — and we’ve had to deal with this without any outside help,” Doualeh noted.

Humanitarian groups and the United Nations have accused the Saudi-led coalition of disproportionately killing thousands of civilians in indiscriminate bombing campaigns. But Doualeh lays blame for the bloodshed squarely on the Iran-backed Houthi rebels.

“The fighting in Yemen was sudden, and the level of preparedness was low. We had to adjust to a crisis, and whenever we have friends in need, we open our hearts and our homes. We generously contributed with whatever resources we had,” the ambassador said. “We don’t have boots on the ground, but we are part of the Arab coalition. We enjoy historic relations with Saudi Arabia. We also support the Yemeni government in its effort to contain the Houthi insurgency, which has had a devastating impact on Yemen. It’s destroying the infrastructure and taking a heavy toll on civilians. And the sooner we flush the Houth insurgency out of all occupied cities in Yemen and eliminate the threat, the better it will be for everyone.”

Meanwhile, Djibouti — a member of the 22-nation Arab League since independence — has broken diplomatic relations with Iran. Doualeh said his country took that step because “we are most profoundly disturbed by Iran’s tendency to destabilize and interfere with the domestic affairs of other countries in the region.”

He added: “Djiboutians traditionally practice a moderate form of Sunni Islam. We are also tolerant, warm, welcoming and culturally open-minded. We wouldn’t be surprised to see some of those people eyeing potentially vulnerable victims in African countries, including Djibouti, trying to propagate their extremist views. Our leaders are vigilant and watchful.”

Historic Rapprochement

On the plus side, two longtime enemies, Ethiopia and Eritrea, have finally kissed and made up. On Sept. 17, Eritrean President Isaias Afwerki and Ethiopian Prime Minister Abiy Ahmed formalized a peace agreement, ending 20 years of hostilities. The two countries have opened their long-closed border, re-established telephone links and launched commercial flights between Addis Ababa and Asmara.

“A new wind of hope blowing across Africa” was how U.N. Secretary-General António Guterres described the rapprochement. A consequence of the long war was that 95 percent of Ethiopian trade flowed from Djibouti ports. With peace at hand, landlocked Ethiopia now has other options, potentially cutting off a lucrative source of income for Djibouti.

Acknowledging the difficulty, Doualeh said he’s still optimistic that Djibouti will remain relevant in the long run.

“Djibouti is the natural port for the 21-member COMESA [Common Market for Eastern and Southern Africa]. It’s true that with the stalemate now over between Ethiopia and Eritrea, things may change a little,” he said. “We have invested in world-class facilities over the years, and we have adapted well in response to Ethiopia’s growing demands. Of course, we are open to competition. The key for us is to further improve our facilities, efficiency of the logistics sector and maximize those comparative advantages.”

The rapprochement between Ethiopia and Eritrea has also paved the way for Djibouti to normalize its ties with Eritrea after 10 years of border hostilities and a brief military clash that led to the taking of prisoners on both sides.

On Sept. 6, delegates from Ethiopia, Somalia and Eritrea met in Djibouti with Guelleh, who told them “Djibouti is ready for reconciliation and formalization of its ties with Eritrea.”

Since 2009, Eritrea had been subjected to a U.N. arms embargo for having supported militants in Somalia and occupying a small piece of Djibouti territory that it had claimed. But those hostilities now appear to be over, with Djibouti Foreign Minister Mahmoud Ali Youssouf recently telling reporters: “With the truthful willingness demonstrated by Eritrea and Djibouti to make peace, all other pending issues will find their way to resolution.”